HomeMy WebLinkAbout025457 ORD - 08/26/2003AN ORDINANCE
AUTHORIZING THE CITY MANAGER TO APPROVE ALL
DOCUMENTS AND FISCAL ARRANGEMENTS REQUIRED FOR
THE PROPOSED SALE OF WATER SUPPLY REVENUE
REFUNDING BONDS BY THE NUECES RIVER AUTHORITY,
INCLUDING THE OFFICIAL STATEMENT, AND BOND
PURCHASE AGREEMENT; APPROVING THE FORM OF THE
BOND RESOLUTION ADOPTED BY THE NUECES RIVER
AUTHORITY; AND DECLARING AN EMERGENCY
WHEREAS, the City of Corpus Christi (the "City") entered into a contract dated May 27,
1976, as supplemented on August 24, 1978 and March 29, 1979, (the "Contract") with
Nueces River Authority (the "Authority") concerning construction of Nueces River
Reclamation Project, Texas (Choke Canyon Reservoir Project) (the "Project"); and
WHEREAS, under the terms of the Contract the Authority and the City have joint control of all
fiscal arrangements in connection with the sale of revenue bonds for the Project, including
interest rates and maturities and the Contract requires that each resolution authorizing such
revenue bonds and each Official Statement relating to such revenue bonds shall be
approved by the City; and
WHEREAS, the Nueces River Authority issued its Water Supply Revenue Bonds, Series
1979 (City of Corpus Christi Project) in the aggregate principal amount of $13,000,000 to
finance certain costs of the Project (the "Series 1979 Bonds"); and
WHEREAS, pursuant to the Contract the City acquired the right to the water made available
by the Project; and
WHEREAS, under the Contract, the Series 1979 Bonds and any bonds issued to refund
such bonds are payable from amounts paid by the City; and
WHEREAS, by resolution adopted on February 22, 1994, by the City Council of the City (the
"City Council"), the City requested that the Authority refund $7,450,000 in aggregate principal
amount of the Series 1979 Bonds and redeem said Refunded Bonds on April 1, 1994; and
WHEREAS, the Nueces River Authority issued its Water Supply Revenue Bonds (City of
Corpus Christi Project), Series 1994 in the aggregate principal amount of $7,900,000 to
refund a portion of the outstanding Series 1994 Bonds (the "Series 1994 Bonds"); and
WHEREAS, the City's staff and Financial Advisor have recommended that $4,290,000 in
aggregate principal amount of the Series 1979 Bonds and the Series 1994 Bonds be
refunded to realize a debt service saving which would result in lowering the City's payments
under the Contract:
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
CORPUS CHRISTI, TEXAS:
SECTION 1. That the form of the bond resolution, a true and correct copy of which is
attached hereto and made a part hereof as Exhibit A (the "Bond Resolution"), is hereby
approved.
SECTION 2. That the City Manager is hereby authorized to review, approve and execute, as
the case may be, such instruments as are necessary to effect the refunding of the Series
1979 Bonds and the Series 1994 Bonds as permitted under the Bond Resolution, including
specifically the bond purchase agreement executed and finally approved by the Nueces
River Authority setting forth the specific terms of the sale of the bonds issued to refund the
Series 1979 Bonds and the Series 1994 Bonds, and the notice of redemption calling the
Series 1979 Bonds and the Series 1994 Bonds for redemption prior their scheduled
maturities; provided, that the City Manager shall not approve or execute such bond purchase
agreement if the minimum savings parameters set forth in the Bond Resolution are not
achieved. A determination by the City Manager that the final forms of said instruments,
including specifically, but not by way of limitation, said bond purchase agreement, comply
with the Contract, the Bond Resolution and applicable State law shall have the same force
and effect as a finding or determination made by the City Council. A certified copy of the
Bond Purchase Agreement and any other instruments relating to the sale of the issued to
refund the Series 1979 Bonds and the Series 1994 Bonds, as finally approved by the Nueces
River Authority and reviewed by the City Manager or the City Attorney on behalf of the City,
shall be provided to the City Council promptly after their execution and delivery.
SECTION 3. That upon written request of the Mayor or five Council members, copy
attached, the City Council (1) finds and declares an emergency due to the need for
immediate action necessary for the efficient and effective administration of City affairs and
(2) suspends the Charter rule that requires consideration of and voting upon ordinances at
two regular meetings so that this ordinance is passed and takes effect upon first reading as
an emergency measure this the 26th day of August, 2003,
ATTEST:
Armando Chapa
City Secretary
THE CITY O~P~
~dr. ' ~/
Mayor
APPROVED: August 21, 2003
~',~.:~ ,Sz-~ ~/-~
Lisa Aguilar '..)
Assistant City Attorney
for City Attorney
(SEAL)
Corpus Christi, Texas
__ day of 7~[,~'~.'~ , 2003
TO THE MEMBERS OF THE CITY COUNCIL
Corpus Christi, Texas
For the reasons set forth in the emergency clause of the foregoing ordinance an
emergency exists requiring suspension of the Charter rule as to consideration and
voting upon ordinances at two regular meetings: i/we, therefore, request that you
suspend said Charter rule and pass this ordinance finally on the date it is introduced, or
at the present meeting of the City Council.
Respectfully,
Respectfully,
Mayor
Council Members
The above ordinance was passed by the following vote:
Samuel L. Neal, Jr.
Brent Chesney
Melody Cooper
Javier D. Colmenero
Henry Garrett
Bill Kelly
Rex A. Kinnison
Jesse Noyola
Mark Scott
RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF
BONDS, AUTHORIZING THE EXECUTIVE DIRECTOR OF THE
AUTHORITY TO EFFECT THE SALE OF THE BONDS SUBJECT TO
THE PARAMETERS SET FORTH IN THIS RESOLUTION, AND
AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH
STATE OF TEXAS
NUECES RIVER AUTHORITY
WHEREAS, under authority of Article XVI, Section 59 of the Texas Constitution, the Nueces River
Authority was created as a conservation and reclamation district, a governmental agency, body politic and
corporate, by Acts 1935, 44th Legislature, First Called Session, Chapter 427, as last amended by Acts 1985,
69th Legislature, Chapter 665 (the latter being herein referred to as the "Act"); and
WHEREAS, pursuant to the authority granted in the Act, the Authority has entered into a contract
by and among the United States of America, the City of Corpus Christi, Texas (herein defined as the "City"),
and the Authority, dated June 30, 1976 (herein defined as the "Federal Contract"), providing for the
construction and operation and maintenance of the Nueces River Reclamation Project, Texas authorized by
the Reclamation Development Act of 1974 approved October 27, 1974 (Public Law 93-493), such project
being also known as the Choke Canyon Reservoir Project (herein defined as the "Project"); and
WHEREAS, under the terms of the Federal Contract, the Authority and the City and the United
States provided, within the limitations therein contained, monies for the construction of the Project including
acquisition of land therefor; and
WHEREAS, pursuant to the Federal Contract, the Authority and the City agreed to advance to the
United States part of the monies for such purposes; and
WHEREAS, pursuant to a contract by and between the Authority and City dated May 27, 1976, as
supplemented on August 24, 1978 and March 29, 1979 (herein defined as the "Contract"), the Authority and
the City delineated their respective responsibilities under the Federal Contract and established their rights
in the use of water available from the Project, and resolved other matters germane to the Project as the same
affects the relationship between the Authority and the City; and
WHEREAS, in accordance with the terms of the Contract, the City has assumed responsibility for
the care, operation and maintenance of the Project unless such responsibility is transferred to the Authority
by amendment to the Contract and such care, operation and maintenance of the Project shall be carried out
in compliance with the applicable requirements of the United States and the Texas Water Commission (now
the Texas Natural Resources Conservation Commission) and in compliance with the requirements of the
Federal Contract and the Contract; and
WHEREAS, pursuant to the Contract, the Authority issued its Nueces River Authority Water Supply
Revenue Bonds, Series 1979 (City of Corpus Christi Project) in the aggregate principal amount of
$13,000,000 (the "Series 1979 Bonds") pursuant to a resolution adopted by the Board of Directors of the
Authority on April 4, 1979 (the "Series 1979 Resolution") to make the advance payments to the United
States; and
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WHEREAS, the Authority issued its Nueces River Authority Water Supply Revenue Refunding
Bonds (City of Corpus Christi, Texas Project), Series 1994, in the aggregate principal amount of $7,900,000
(the "Series 1994 Bonds") pursuant to a resolution adopted by the Board of Directors of the Authority on
March 3, 1994 (the "Series 1994 Resolution"), to refund $7,450,000 in aggregate principal amount of the
Series 1979 Bonds, which Series 1994 Bonds were issued as "Additional Bonds" on a parity with the Series
1979 Bonds pursuant to the provisions of the 1979 Resolution; and
WHEREAS, pursuant to the Contract, such Series 1979 Bonds and any bonds issued on a parity
therewith are to be secured by a pledge of the payments to be made to the Authority by the City pursuant to
the Contract and such payments are to be made from the revenues of the City's waterworks system, as an
operating expense of such system; and
WHEREAS, by ordinance adopted on August 26, 2003, the City Council of the City approved the
form of this Resolution, authorized the City Manager to approve the final form of this Resolution and the
Purchase Agreement relating to the bonds, and requested that the Authority refund $4,290,000 in aggregate
principal amount of the Series 1979 Bonds and the Series 1994 Bonds (collectively, the "Refunded Bonds")
and redeem said Refunded Bonds in accordance with the provisions of the Notice of Redemption to be finally
approved by the Executive Director of the Authority and attached hereto; and
WHEREAS, it is hereby found and determined necessary and proper for the Authority to issue
revenue bonds to refund the Refunded Bonds with such refunding bonds to be issued as "Additional Bonds"
pursuant to the provisions of the Series 1979 Resolution and to be so secured, all in accordance with the
terms of the Federal Contract and the Contract; and
WHEREAS, it is hereby found and determined that the refunding of the Refunded Bonds shall be
delegated to the Executive Director of the Authority, as current market conditions in the public debt markets
are fluctuating and it is in the best interests of the Authority and the City that such refunding be effected in
a manner that would enable the most favorable economic financing to occur, subject to the parameters set
forth in this Resolution;
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE NUECES
RIVER AUTHORITY:
ARTICLE 1
DEFINITIONS
Section 1.1. TERMS. The terms defined in this section for all purposes of this Resolution, except
where the context by clear implication shall otherwise require, shall have the respective meanings as follows,
to-wit:
"Acts - The Act as defined in the recitals to this Resolution, and Chapter 1207, Texas Government
Code.
"Additional Bonds" - Bonds issued on a parity with the Series 1979 Bonds, the Series 1994 Bonds
and the Series 2003 Bonds pursuant to the terms of this Resolution.
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"Authority" - Nueces River Authority and any other public body or agency at any time succeeding
to the property rights, powers and obligations thereof.
"Board" or "Board of Directors" - the duly appointed and acting Board of Directors of the Authority.
"Bond" or "Bonds" - One or more of the Series 1979 Bonds, the Series 1994 Bonds, the Series 2003
Bonds, and the Additional Bonds, as the case may be, authorized by the Resolution.
"Bond Resolution" - The Series 1979 Resolution, the resolution authorizing the issuance of the Series
1994 Bonds, this Resolution and any other resolution of the Board authorizing the Additional Bonds.
"City" - The City of Corpus Christi, Texas.
"City Manager" - The duly appointed and acting City Manager of the City.
"Construction Fund" - The fund by that name crated by Section 6.1 of the Series 1979 Resolution.
"Consulting Engineers" - The independent engineer or engineering firm or corporation employed by
the Authority in accordance with Article VIII of the Series 1979 Resolution.
"Contract" - The contract between the Authority and the City dated the 27th day of May, 1976, as
supplemented on August 24, 1978 and March 29, 1979 and as hereafter supplemented or amended.
"Contract Payment Fund" - Nueces River Authority Contract Payments for Debt Service Fund
created by Section 5.2 of the Series 1979 Resolution.
"Contract Payments for Debt Service" - ]'he payments made by the City to the Authority pursuant
to the Contract as are necessary to pay the principal of and/or interest on the Bonds and to make deposits in
the Reserve Fund or other Funds as may be required by the Bond Resolution.
"DTC" - The Depository Trust Company, New York, New York, or any successor securities
depository.
"DTC Participant" - Securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations on whose behalfDTC was created to hold securities to facilitate the clearance
and settlement of securities transactions among DTC Participants.
"Executive Director" - The duly appointed and acting Executive Director of the Authority.
"Federal Contract" - The contract by and among the United States of America, the City and the
Authority, dated June 30, 1976, providing for the construction, operation and maintenance of the Project and
entitled "Contract Amongthe United States of America, City of Corpus Christi, Texas, and the Nueces River
Authority, Nueces River Reclamation Project, Texas".
"Financial Advisor" - First Southwest Company, San Antonio, Texas, or its successor.
"Fiscal Year" - The twelve month period beginning September I of each calendar year.
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"Fiscal Year of the City," - The fiscal year of the City, which currently begins on August 1 of each
year, as it may be changed from time to time with notice to the Authority.
"Interest and Sinking Fund" - Nueces River Authority Water Supply Revenue Bonds Interest and
Sinking Fund created by Section 5.2 of the Series 1979 Resolution.
"Investment Securities" -Direct obligations of, or obligations the principal of and the interest on
wh ich are unconditionally guaranteed by, the United States Government, Federal Intermediate Credit Banks,
Federal Land Banks, Federal National Mortgage Association, Federal Home Loan Banks or Banks for
Cooperatives.
"MSRB" - The Municipal Securities Rulemaking Board.
"NRMS1R" - Each person whom the SEC or its staff has determined to be a nationally recognized
municipal securities information repository within the meaning of the Rule from time to time.
"Paying Agent/Registrar" - JPMorgan Chase Bank, or its successors.
"Project" - All features comprising the Nueces River Reclamation Project, Texas, authorized by the
Act of Congress approved October 27, 1974 (Public Law 93-493), and constructed or provided under the
terms of the Federal Contract; also known as the Choke Canyon Reservoir Project.
"Purchase Agreement" - The agreement among the Authority, the City, and the Purchaser pertaining
to the purchase of the Series 2003 Bonds by the Purchaser.
"Purchaser" - The investment banking firm, bank or other entity which contracts to purchase the
Series 2003 Bonds in accordance with the terms and conditions of the Purchase Agreement.
"Refunded Bonds" - The Series 1979 Bonds and the Series 1994 Bonds to be refunded with the
proceeds of the Series 2003 Bonds, as designated in the Purchase Agreement.
"Reserve Fund" - Nueces River Authority Water Supply Revenue Bonds Reserve Fund created by
Section 5.2 of the Series 1979 Resolution.
"Resolution" - This resolution, as from time to time it may be amended.
"Rule" - SEC Rule 15c2-12, as amended from time to time.
"Sale and Offering Documents - Any Preliminary Official Statement, Official Statement or other
offering document for the Bonds.
"SEC" - The United States Securities and Exchange Commission.
"Series 1979 Bonds" - Nueces River Authority Water Supply Revenue Bonds, Series 1979 (City of
Corpus Christi Project) authorized by the Series 1979 Resolution.
"Series 1994 Bonds" - Nueces River Authority Water Supply Revenue Refunding Bonds, (City of
Corpus Christi, Texas Project) Series 1994 authorized by the Series 1994 Resolution.
Draft 8/21/03 4
"Series 2003 Bonds" - Nueces River Authority Water Supply Revenue Refunding Bonds, (City of
Corpus Christi, Texas Project), Series 2003 authorized by this Resolution.
"Trustee" - JPMorgan Chase Bank, Dallas, Texas, a state banking association organized and existing
under the laws of the State of New York, administering the trusts established for the benefit of the Series
2003 Bonds from its office in Dallas, Texas, or its successor.
"United States" - The United States of America.
Section 1.2. CONSTRUCTION. This Resolution, except where the context by clear implication
shall otherwise require, shall be construed and applied in a manner that the singular and plural both include
the other, and pronouns include both singular and plural and include all genders.
ARTICLE TWO
GENERAL TERMS, PROVISIONS AND CHARACTERISTICS OF THE
SERIES 2003 BONDS
Section 2.1. GENERAL TERMS. The principal of and interest on the Bonds shall be payable in
lawful money of the United States of America, without exchange or collection charges upon presentation
and surrender al the principal corporate trust offices of JPMorgan Chase Bank in Dallas, Texas. The Bonds
shall be special obligations of the Authority and the principal thereof, premium, if any, and the interest
thereon shall be secured by a first lien on and shall be payable only out of the revenues herein pledged.
Section 2.2. SERIES 2003 BONDS ARE ADDITIONAL BONDS. The Series 2003 Bonds shall
be Additional Bonds to the Series 1979 Bonds and the Series 1994 Bonds and as such shall be on a parity
without priority as to the security of any Bond over any other Bond by reason of series, date of issue, date
of maturity, date of delivery or any other characteristic whatsoever.
Section 2.3. CHARACTERISTICS OF THE BONDS. Registration, Transfer, Conversion and
Exchauge; Authentication; Book-Entry Only System. (a) The Authority shall keep or cause to be kept at
the principal corporate trust office of the Paying Agent/Registrar in Dallas, Texas books or records for the
registration of the transfer, conversion and exchange of the Bonds (the "Registration Books"), and the
Authority hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books
or records and make such registrations of transfers, conversions and exchanges under such reasonable regula-
tions as the Authority and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make
such registrations, transfers, conversions and exchanges as herein provided. The Paying Agent/Registrar
shall obtain and record in the Registration Books the address of the registered owner of each Bond to which
payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each
registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be
mailed, and such interest payments shall not be mailed unless such notice has been given. To the extent
possible and under reasonable circumstances, all transfers of Bonds shall be made within three business days
after request and presentation thereof. The Authority shall have the right to inspect the Registration Books
during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall
keep the Registration Books confidential and, unless otherwise required by law, shall not permit their
inspection by any other entity. The Paying Agent/Registrar's standard or customary fees and charges for
making such registration, transfer, conversion, exchange and delivery of a substitute Bond or Bonds shall
be paid as provided in the FORM OF BOND set forth in this Resolution. Registration of assignments, trans-
fers, conversions and exchanges of Bonds shall be made in the manner provided and with the effect stated
Dram 8/21/03 5
in the FORM OF BOND set forth in this Resolution. Each substitute Bond shall bear a letter and/or number
to distinguish it from each other Bond.
An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such
Bond, date and manually sign the Paying Agent/Registrar's Authentication Certificate, and no such Bond
shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Reg-
istrar promptly shall cancel all paid Bonds and Bonds surrendered for conversion and exchange. No
additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the
Authority or any other body or person so as to accomplish the foregoing conversion and exchange of any
Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and
delivery of the substitute Bonds in the manner prescribed herein. Pursuant to Chapter 1206, Texas
Government Code, the duty of conversion and exchange of Bonds as aforesaid is hereby imposed upon the
Paying Agent/Registrar, and, upon the execution of said Certificate, the converted and exchanged Bond shall
be valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds which
initially were issued and delivered pursuant to this Resolution, approved by the Attorney General, and regis-
tered by the Comptroller of Public Accounts.
(b) Payment of Bonds and Interest. The Authority hereby further appoints the Paying
Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, all as pro-
vided in this Resolution. The Paying Agent/Registrar shall keep proper records of all payments made by the
Authority and the Paying Agent/Registrar with respect to the Bonds, and of all conversions and exchanges
of Bonds, and all replacements of Bonds, as provided in this Resolution. However, in the event of a
nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date
for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and
when funds for the payment of such interest have been received from the Authority. Notice of the Special
Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after the
Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United
States mail, first-class postage prepaid, to the address of each registered owner appearing on the Registration
Books at the close of business on the last business day next preceding the date of mailing of such notice.
(c) In General. The Bonds (i) shall be issued in fully registered form, without interest coupons, with
the principal of and interest on such Bonds to be payable only to the registered owners thereof, (ii) may be
redeemed prior to their scheduled maturities (notice of which shall be given to the Paying Agent/Registrar
by the Authority at least 40 days prior to any such redemption date), (iii) may be transferred and assigned,
(iv) may be converted and exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed,
sealed, executed and authenticated, (vii) the principal of and interest on the Bonds shall be payable, and (viii)
shall be administered and the Paying Agent/Registrar and the Authority shall have certain duties and
responsibilities with respect to the Bonds, all as provided, and in the manner and to the effect as required or
indicated, in the FORM OF BOND set forth in this Resolution. The Bonds initially issued and delivered
pursuant to this Resolufion are not required to be, and shall not be, authenticated by the Paying Agent/Regis-
trar, but on each substitute Bond issued in conversion of and exchange for any Bond or Bonds issued under
this Resolution the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S
AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF BOND.
(d) Substitute Paying Agent/Registrar. The Authority covenants with the registered owners of the
Bonds that at all times while the Bonds are outstanding the Authority will provide a competent and legally
qualified bank, trust company, financial institution, or other agency to act as and perform the services of
Paying Agent/Registrar for the Bonds under this Resolution, and that the Paying Agent/Registrar will be one
such entity. The Authority reserves the right to, and may, at its option, change the Paying Agent/Registrar
upon not less than 120 days written notice to the Paying Agent/Registrar, to be effective not later than 60
Draft 8/21/03 6
days prior to the next principal or interest payment date after such notice. In the event that the entity at any
time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign
or otherwise cease to act as such, the Authority covenants that promptly it will appoint a competent and
legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar
under this Resolution. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar
promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent
books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the
Authority. Upon any change in the Paying Agent/Registrar, the Authority promptly will cause a written
notice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds, by U n ited
States mail, first-class postage prepaid, which notice also shall give the address of the new Paying
Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be
deemed to have agreed to the provisions of this Resolution, and a certified copy of this Resolution shall be
delivered to each Paying Agent/Registrar.
(e) Book-Entry Only System Generally. The Bonds issued in exchange for the Bonds initially issued
and delivered under this Resolution shall be issued in the form ora separate single fully registered Bond for
each of the maturities thereof registered in the name of Cede & Co., as nominee of The Depository Trust
Company, New York, New York ("DTC"), and except as provided in subsection (b) hereof, all of the Bonds
shall be registered in the name of Cede & Co., as nominee of DTC.
With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the Authority and
the Paying Agent/Registrar shall have no responsibility or obligation to any DTC Participant or to any person
on behalf of whom such a DTC Participant holds an interest on the Bonds. Without limiting the immediately
preceding sentence, the Authority and the Paying Agent/Registrar shall have no responsibility or obligation
with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to
any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than
the Bondholder, as shown on the Registration Books, of any notice with respect to the Bonds, including any
notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than a
Bondholder, as shown in the Registration Books, of any amount with respect to principal of, premium, if any,
and interest on, or Compounded Amount of, the Bonds. Notwithstanding any other provision of this
Resolution to the contrary but to the extent permitted by law, the Authority and the Paying Agent/Registrar
shall be entitled to treat and consider the person in whose name each Bond is registered in the Registration
Books as the absolute owner of such Bond for the purpose of payment of principal, premium, if any, and
interest, with respect to such Bond, for the purpose of giving notices of redemption and other matters with
respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other
purposes whatsoever. The Paying Agent/Registrar shall pay all principal of, premium, if any, and interest
on, the Bonds only to or upon the order of the respective owners, as shown in the Registration Books as
provided in this Resolution, or their respective attorneys duly authorized in writing, and all such payments
shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to payment
of principal of, premium, if any, and interest on, the Bonds to the extent of the sum or sums so paid. No
person other than an owner, as shown in the Registration Books, shall receive a Bond certificate evidencing
the obligation of the Authority to make payments of principal, premium, if any, and interest, or Compounded
Amount, as the case may be, pursuant to this Resolution. Upon delivery by DTC to the Paying
Agent/Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions in this Resolution with respect to interest checks being mailed
to the registered owner at the close of business on the Record Date, the word "Cede & Co.," in this
Resolution shall refer to such new nominee of DTC.
(f) Successor Securities Depository; Transfers Outside Book-Entry Only System. In the event that
the Authority determines to discontinue the use of the Book-Entry Only System through DTC or DTC
Draft 8/21/03 7
determines to discontinue providing its services with respect to the Bonds, the Authority shall (i) appoint a
successor securities depository, qualified to act as such under Section 17A of the Securities and Exchange
Act of 1934, as amended, notify DTC and DTC Participants of the appointment of such successor securities
depository and transfer one or more separate Bonds to such successor securities depository or (ii) notify DTC
and DTC Participants of the availability through DTC of Bonds and transfer one or more separate Bonds to
DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer
be restricted to being registered in the Registration Books in the name of Cede & Co., as nominee of DTC,
but may be registered in the name of the successor securities depository, or its nominee, or in whatever name
or names Bondholders transferring or exchanging Bonds shall designate in accordance with the provisions
of this Resolution.
(g) Payment to Cede & Co. Notwithstanding any other provision of this Resolution to the contrary,
so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect
to principal of, premium, if any, and interest on such Bond and all notices with respect to such Bond shall
be made and given, respectively, in the manner provided in the representation letter of the Authority to DTC.
(h) Limitation on Transfers. Notwithstanding the provisions of subsections (e), (f) and (g) of this
Section 2.3, the Purchase Agreement may provide that the book-entry-only system shall not be initially
utilized in regard to ownership and transferability of the Bonds, and that there shall there shall be restrictions
on transferability of the Bonds such that the Bonds shall not be transferred to any person, firm or other entity,
unless prior to such transfer the registered owner of the Bond obtains and delivers to the Authority a
certificate, executed by the person, firm or other entity to whom the Bond is to be transferred (the
"Transferee") and in form acceptable to the Authority, certifying that: (A) the Transferee is an "accredited
investor" within the meaning of Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, or a state or national bank organized under the laws of the
United States; (B) the Transferee has sufficient knowledge and experience in financial and business matters,
including purchase and ownership of tax-exempt municipal obligations, to be able to evaluate the economic
risks and merits of the investment represented by the purchase of the Bonds; (C) the Transferee has made
its own inquiry and analysis with respect to the Bonds and the security therefor, and other material factors
affecting the security and payment of the Bonds, and has not relied upon any statement by the Authority's
financial consultants or legal advisors in com~ection with such inquiry or analysis or in connection with the
offer and sale of the Bonds; (D) the Transferee has either been furnished with or has had access to all
necessary information that it desires in order to enable it to make an informed decision concerning the
investment evidenced by the Bonds, and the Transferee has had the opportunity to ask questions and receive
answers from knowledgeable individuals concerning the purpose for which the proceeds of the Bonds will
be utilized, and the security therefor, so that it has been able to make an informed decision to purchase the
Bonds; (E) the Transferee is purchasing the Bond for its own account and not with a view to, and with no
then present intention of, distributing or reselling the Bond or any part thereof and that in the event the
Transferee sells or otherwise disposes of the Bond that such sale or disposition shall be made only to an
investor described in (A), above, and that such investor shall execute and provide to the Transferee and to
the Authority a certificate as required by and to the effect provided in this subsection; and (F) the Transferee
further acknowledges that it is responsible for consulting with its advisors concerning any obligations,
including, but not limited to, any obligations pursuant to federal and state securities and income tax laws,
it may have with respect to subsequent purchasers of the Bonds if and when any such future disposition of
the Bonds may occur. Upon receipt and acceptance of said certificate, the Authority shall notify the Paying
Agent/Registrar in writing that the requirements of this section have been satisfied and the name of the
person, firm or other entity to whom the Bond transferred.
(i) Notice of Redemption.
(i) In addition to the Notice of Redemption set forth in the FORM OF BOND, the Paying
Agent/Registrar shall give notice of redemption of the Bonds by mail first-class postage prepaid at
Draf~ 8/21/03 8
least thirty (30) days prior to a redemption date to each registered securities depository and to any
national information service that disseminates redemption notices. In addition, in the event ora
redemption caused by an advance refunding of the Bonds, the Paying Agent/Registrar shall send a
second notice of redemption to the persons specified in the immediately preceding sentence at least
thirty (30) days but not more than ninety (90) days prior to the actual redemption date. Any notice
sent to the registered securities depositories or such national information services shall be sent so
that they are received at least two (2) days prior to the general mailing or publication date of such
notice. The Paying Agent/Registrar shall also send a notice of prepayment or redemption to the
registered owner of any Bond who has not sent the Bonds in for redemption sixty (60) days after the
redemption date.
(ii) Each Notice of Redemption, whether required in the FORM OF BOND or in this
Section, shall contain a description of the Bonds to be redeemed including the complete name of the
Bonds, the Series, the date of issue, the interest rate, the maturity date, the CUSIP number, the
certificate numbers, the amounts called of each certificate, the publications and mailing date for the
notice, the date of redemption, the redemption price, the name of the Paying Agent/Registrar and the
address at which the Bonds may be redeemed, including a contact person and telephone number.
(iii) AIl redemption payments made by the Paying Agent/Registrar to the Bondholders shall
include a CUSIP number relating to each amount paid to such registered owner.
(j) Execution. In case any person who shall have signed or signed and sealed any Bond as an officer
of the Authority shall have ceased to be such officer before the Bonds so signed or signed and sealed shall
have been actually delivered, such Bonds, nevertheless, may delivered and issued as though the person who
signed or signed and sealed such Bond had not ceased to be such officer of the Authority. Any Bonds
issuable hereunder may be signed and sealed on behalf of the Authority by such persons as at the actual date
of the execution of such Bonds shall be proper officers of the Authority although at the date of such Bonds
any such person shall not have been an officer of the Authority. The Bonds shall be executed by the manual
or facsimile signatures of the President and the Secretary or the Assistant Secretary of the Authority, and the
Authority may adopt or use for that purpose the facsimile signature of any persons who shall have been such
officers notwithstanding the fact that they may have ceased to be such officers at the time when such Bonds
are actually authenticated and delivered. The official seal of said Authority shall be impressed, or printed,
or lithographed on each of the Bonds.
Section 2.4. FORM OF BOND. The form of the Bonds, including the form of Paying
Agent/Registrar's Authentication Certificate, the form of Assignment and the form of Registration Certificate
of the Comptroller of Public Accounts of the State of Texas to be attached only to the Bonds initially issued
and delivered pursuant to this Resolution, shall be, respectively, substantially as follows, with such
appropriate variations, omissions, or insertions as are permitted or required by this Resolution:
Draft 8/21/03 9
FORM OF BOND
ITRANSFER OF OWNERSHIP OF THIS BOND IS SUBJECT TO CERTAIN
LIMITATIONS SET FORTH IN THE RESOLUTION. REFERENCE IS HEREBY MADE
TO THE RESOLUTION FOR A DESCRIPTION OF SUCH LIMITATIONS.]*
* lfNot Book-Entry-Only through DTC.
UNITED STATES OF AMERiCA
STATE OF TEXAS
NUECES RIVER AUTHORITY
WATER SUPPLY REVENUE REFUNDING BONDS,
(CITY OF CORPUS CHRiSTI, TEXAS PROJECT)
SERIES 2003
PRINCIPAL
AMOUNT
$
INTEREST RATE DATE OF BONDS
MATURiTY DATE
CUSIP NO.
% ,2003 April 1,
REGISTERED OWNER:
PRINCIPAL AMOUNT:
DOLLARS
ON THE MATURITY DATE specified above, the NUECES RIVER AUTHORITY (the
"Authority"), being a political subdivision of the State of Texas, hereby promises to pay to the
REGISTERED OWNER specified above (hereinafter called the "registered owner") the principal amount
specified above and to pay interest thereon from ,200_, on __ 1,200_, and semiannually
on each 1 and 1 thereafter to the maturity date specified above, at the interest rate per annum
specified above; except that if this Bond is required to be authenticated and the date of its authentication is
later than the first Record Date (hereinafter defined), such principal amount shall bear interest from the
interest payment date next preceding the date of authentication, unless such date of authentication is after
any Record Date but on or before the next following interest payment date, in which case such principal
amount shall bear interest from such next following interest payment date; provided, however, that if on the
date of authentication hereof the interest on the Bond or Bonds, if any, for which this Bond is being
exchanged or converted from is due but has not been paid, then this Bond shall bear interest from the date
to which such interest has been paid in full. Capitalized terms used and not defined herein shall have the
meanings assigned to such terms in the Bond Resolution (hereinafter defined).
THE PRiNCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United
States of America, without exchange or collection charges solely from funds of the Authority required by
the Bond Resolution to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter
provided. The principal of this Bond shall be paid to the registered owner hereof upon presentation and
surrender of this Bond at maturity at the principal corporate trust office of JPMorgan Chase Bank in Dallas,
Texas, which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be
made by the Paying Agent/Registrar to the registered owner hereof on each interest payment date by check
Draft 8/21/03 10
dated as of such interest payment date, and such check shall be sent by the Paying Agent/Registrar by United
States mail, first class postage prepaid, on each such interest payment date, to the registered owner hereof,
at its address as it appeared on the fifteenth day of the month next preceding each such date (the "Record
Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. In addition,
interest payments may be made by
such other methods, acceptable to the Paying Agent/Registrar, requested by and at the risk and expense of
the registered owner. Any accrued interest due at maturity shall be paid to the registered owner upon
presentation and surrender of this Bond for payment at the principal corporate trust office of the Paying
Agent/Registrar. The Authority covenants with the registered owner of this Bond that on or before each
principal payment date and interest payment date for this Bond it will make available to the Paying
Agent/Registrar, from the "Interest and Sinking Fund" as provided by the Bond Resolution (hereinafter
defined), the amounts required to provide for the payment, in immediately available funds, of all principal
of and interest on the Bonds, when due.
IF THE DATE for any payment due on this Bond shall be a Saturday, Sunday, a legal holiday, or
a day on which banking institutions in the city where the principal corporate trust office of the Paying
Agent/Registrar is located are authorized by law or executive order to close, or the United States Postal
Service is not open for business, then the date for such payment shall be the next succeeding day which is
not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close, or
the United States Postal Service is not open for business; and payment on such date shall have the same force
and effect as if made on the original date payment was due.
THIS BOND is one of a Series of Bonds dated as of 1,200_, authorized by a Resolution
adopted by the Board of Directors of the Authority on August 22, 2003 (the "Bond Resolution") in
accordance with the Constitution and laws of the State of Texas in the principal amount orS (the
"Bonds") for the purpose of refunding the Refunded Bonds.
[ON APRIL 1,20__, or any date thereafter, the outstanding Bonds of this Series may be redeemed
prior to their scheduled maturities, at the option of the Authority, with funds derived from any available and
lawful source, as a whole, or in part, (provided that a portion of a Bond may be redeemed only in an integral
multiple of $5,000) at the redemption price of the principal amount of Bonds called for redemption, plus
accrued interest thereon to the date fixed for redemption. If less than all of the Bonds are to be redeemed,
the Authority shall determine the maturity or maturities and the amounts thereof to be redeemed and shall
direct the Paying Agent/Registrar to call by lot Bonds, or portions thereof, within such maturity or maturities
and in such principal amounts, for redemption; provided that during any period in which ownership of the
Bonds is determined by a book entry at a securities depository for the Bonds, if fewer than all of the Bonds
of the same maturity and bearing the same interest rate are to be redeemed, the particular Bonds of such
maturity and bearing such interest rate shall be selected in accordance with the arrangements between the
Authority and the securities depository.]*
[AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior
to maturity, a written notice of such redemption shall be sent by the Paying Agent/Registrar by United States
mail, first-class postage prepaid, to the registered owner of each Bond to be redeemed at its address as it
appeared on the day such notice of redemption is mailed; provided, however, that the failure to send, mail
or receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity
or effectiveness of the proceedings for the redemption of any Bond. By the date fixed for any such
redemption, due provision shall be made with the Paying Agent/Registrar for the payment of the required
redemption price for the Bonds or portions thereofwhich are to be so redeemed. If such notice of redemption
is given and if due provision for such payment is made, all as provided above, the Bonds or portions thereof
which are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled
Draft 8/21/03 1 1
maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded
as being outstanding except for the right of the registered owner to receive the redemption price from the
Paying Agent/Registrar out of the funds provided for such payment. If a portion of any Bond shall be
redeemed, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any
denomination or denominations in any integral multiple of $5,000, at the written request of the registered
owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the
registered owner upon the surrender thereof for cancellation, at the expense of the Authority, all as provided
in the Bond Resolution.]*
* To be added only if the Bonds are subject to redemption prior to maturity
[ALL BONDS OF THIS SERIES are issuable solely as fully registered Bonds, without interest
coupons, in the denomination of $100,000 or any integral multiple of $5,000 in excess thereof.].**
** To be used if Bonds are issued in $100,000 minimum denominations
[ALL BONDS OF THIS SERIES are issuable solely as fully registered Bonds, without interest
coupons, in the denomination of any integral multiple of $5,000. As provided in the Bond Resolution, this
Bond may, at the request of the registered owner or the assignee or assignees hereof, be assigned, transferred,
converted into and exchanged for a like aggregate amount of fully registered Bonds, without interest
coupons, payable to the appropriate registered owner, assignee or assignees, as the case may be, having any
authorized denomination or denominations as requested in writing by the appropriate registered owner,
assignee or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for
cancellation, all in accordance with the form and procedures set forth in the Bond Resolution. Among other
requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying
Agent/Registrar, together with proper instruments of assignment, in form and with guarantee of signatures
satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions
hereof in any authorized denomination to the assignee or assignees in whose name or names this Bond or any
such portion or portions hereof is or are to be registered. The Form of Assignment printed or endorsed on
this Bond may be executed by the registered owner to evidence the assignment hereof, but such method is
not exclusive, and other instruments of assignment satisfactory to the Paying Agent/Registrar may be used
to evidence the assignment of this Bond or any portion or portions hereof from time to time by the registered
owner. The Authority shall pay the Paying Agent/Registrar's reasonable standard or customary fees and
charges for transferring and exchanging any Bond or portion thereof. Any taxes or governmental charges
required to be paid with respect thereto shall be paid by the one requesting such assignment, transfer,
conversion or exchange, as a condition precedent to the exercise of such privilege. The Paying
Agent/Registrar shall not be required to make any such transfer or exchange with respect to any Bond or any
portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date; provided,
however, such limitation of transfer shall not be applicable to an exchange by the Registered Owner of an
unredeemed balance of a Bond called for redemption in part. ]***
***To be used if Bonds are issued in minimum denominations of $5,000
IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Authority, resigns, or
otherwise ceases to act as such, the Authority has covenanted in the Bond Resolution that it promptly will
appoint a competent and legally qualified substitute therefor, and cause written notice thereof to be mailed
to the registered owners of the Bonds.
Draft 8/21/03 12
1T IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly
authorized, issued, and delivered; that all acts, conditions, and things required or proper to be performed,
exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been
performed, existed, and been done in accordance with law; that this Bond is a special obligation of the
Authority, and that the principal of and interest on this Bond, together with the Nueces River Authority
Water Supply Revenue Bonds, Series 1979 (City of Corpus Christi Project) and the Nueces River Authority
Water Supply Revenue Refunding Bonds (City of Corpus Christi Project), Series 1994 are payable from, and
secured by a first lien on and pledge of certain payments to be made by the City of Corpus Christi, Texas to
the Authority pursuant to a contract dated the 27th day of May, 1976, as supplemented and amended.
SAID Authority has reserved the right, subject to the restrictions stated, and adopted by reference,
in the Bond Resolution authorizing this series of Bonds, to issue additional parity revenue bonds which also
may be made payable from and secured by a first lien on and pledge of the aforesaid payments securing this
series of Bonds.
THE HOLDER HEREOF shall never have the right to demand payment of this obligation out of any
funds raised or to be raised by taxation.
BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all
of the terms and provisions of the Bond Resolution, agrees to be bound by such terms and provisions,
acknowledges that the Bond Resolution is duly recorded and available for inspection in the official minutes
and records of the governing body of the Authority, and agrees that the terms and provisions of this Bond
and the Bond Resolution constitute a contract between each registered owner hereof and the Authority.
IN WITNESS WHEREOF, the Authority has caused this Bond to be signed with the manual or
facsimile signature of the President of the Board of Directors of the Authority and countersigned with the
manual or facsimile signature of the Secretary or Assistant Secretary of the Board of Directors of the
Authority, and has caused the official seal of the Authority to be duly impressed, or placed in facsimile, on
this Bond.
, Board of Directors
President, Board of Directors
(SEAL)
Draft 8/21/03 13
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Bond is not accompanied by an
executed Registration Certificate of the Comptroller
of Public Accounts of the State of Texas)
It is hereby certified that this Bond has been issued under the provisions of the Bond Resolution
described in the text of this Bond; and that this Bond has been issued in exchange for a bond or bonds, or
a portion of a bond or bonds ora series which originally was approved by the Attorney General of the State
of Texas and registered by the Comptroller of Public Accounts of the State of Texas.
Dated:
JPMorgan Chase Bank,
Paying Agent/Registrar
By
Authorized Representative
FORM OF REGISTRATION CERTIFICATE OF
THE COMPTROLLER OF PUBLIC ACCOUNTS:
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this Bond has been examined, certified as to validity, and approved by the
Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public
Accounts of the State of Texas.
Witness my signature and seal this
(COMPTROLLER'S SEAL)
Comptroller of Public Accounts
of the State of Texas
Draft 8/21/03 14
FORM OF ASSIGNMENT:
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
Please insert Social Security or Taxpayer
Identification Number of Transferee
(Please print or typewrite name and address,
including zip code of Transferee)
the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints
., attorney, to register
the transfer of the within Bond on the books kept for registration thereof, with full power of substitution in
the premises.
Dated:
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed
by an eligible guarantor institution
participating in a securities transfer
association recognized signature guarantee
program.
NOTICE: The signature above must
correspond with the name of the registered
owner as it appears upon the front of this
Bond in every particular, without alteration
or enlargement or any change whatsoever.
[INSURANCE LEGEND]
Draft 8/21/03
15
ARTICLE THREE
AUTHORIZATION AND ISSUANCE OF SERIES 2003 BONDS
Section 3.1. DESIGNATION. There shall be authorized to be issued, sold, and delivered hereunder
fully registered bonds, without interest coupons, numbered consecutively from R-1 upward, payable to the
respective initial registered owners thereof, or to the registered assignee or assignees thereof or any portion
or portions thereof, in the denomination of $5,000 or any integral multiple thereof, maturing not later than
April 1,2009, serially or otherwise on the dates, in the years and in the principal amounts, respectively, and
dated, all as set forth in the Purchase Agreement. Notwithstanding the preceding sentence, in the event that
the Purchase Agreement provides that there shall be restrictions on transferability with respect to the Bonds
as provided in Section 2.3(h) of this Resolution, then the Bonds shall be issued in denominations of$100,000
or any integral multiple of $5,000 in excess thereof. The Series 2003 Bonds are hereby authorized to be
issued for the purpose of refi~nding the Refunded Bonds, and to pay the costs of issuing the Series 2003
Bonds. The Series 2003 Bonds authorized by this Resolution to be issued, sold and delivered may not be
sold in an aggregate principal amount in excess of $5,000,000. The Series 2003 Bonds shall be entitled
"Nueces River Authority Water Supply Revenue Refunding Bonds (City of Corpus Christi, Texas Project),
Series 2003, or such other name and series designation as determined by the Executive Director under
authority granted in Section 3.2 of this Resolution. The Series 2003 Bonds shall be issued in accordance
with the provisions of the Constitution and Statutes of the State of Texas, including Article 16, Section 59
of the Texas Constitution and the Acts.
Section 3.2. SALE OF SERIES 2003 BONDS. (a) The Series 2003 Bonds will be sold through a
negotiated sale pursuant to the procedures set forth herein. The Executive Director, acting for and on behalf
of the Authority, is authorized to enter into and carry out the Purchase Agreement with the Purchaser, in
substantially thc form attached hereto and made a part hereof for all purposes, with such changes as may be
necessary to effect the sale of the Bonds to the Purchaser. The Series 2003 Bonds shall be sold to the
Purchaser at such price, and subject to such terms and conditions as set forth in the Purchase Agreement, as
shall be determined by the Executive Director pursuant to subsection (c) below. The authority of the
Executive Director to execute the Purchase Agreement shall expire if the Purchase Agreement has not been
executed by the City and by the Purchaser (acting through their duly designated representative) by 5:00 p.m.,
August 21, 2004. [Prior to the execution of the Purchase Agreement, the Bonds shall have an underlying
rating from a nationally-recognized municipal bond rating agency in one of the four highest generic rating
categories.] Any finding or determination made by the Executive Director relating to the issuance and sale
of the Series 2003 Bonds and the execution of the Purchase Agreement in connection therewith shall have
the same force and effect as a finding or determination made by the Board of Directors.
(b) As authorized by Chapter 1207, Texas Government Code, the Executive Director is hereby
authorized, appointed, and designated to act on behalf of the City in selling and delivering the Series 2003
Bonds and carrying out the other procedures specified in this Ordinance, including determining and fixing
the date of the Series 2003 Bonds, any additional or different designation or title (including, but not limited
to series designation) by which the Series 2003 Bonds shall be known, the aggregate principal amount of
the Series 2003 Bonds, the date of delivery of the Series 2003 Bonds, the price at which the Series 2003
Bonds will be sold, the years in which the Series 2003 Bonds will mature, the principal amount of Series
2003 Bonds to mature in each of such years, the rate of interest to be borne by each such maturity, the
interest payment periods, the dates, price, and terms upon and at which the Series 2003 Bonds shall be
subjecl to redemption prior to maturity at the option of the Authority, as well as any mandatory sinking fund
redemption provisions, and all other matters relating to the issuance, sale, and delivery of the Series 2003
Bonds, and the refunding of the Refunded Bonds, including, without limitation, the approval of an escrow
agreement, the approval of any Sale and Offering Document, and obtaining a municipal bond insurance
Draft 8/21/03 16
policy in support of the Series 2003 Bonds, all of which shall be specified in the Purchase Agreement;
provided, that (i) the price to be paid for the Series 2003 Bonds shall not less than [95%] of the aggregate
original principal amount thereof, plus accrued interest thereon from the date of their delivery and, (ii) none
of the Series 2003 Bonds shall bear interest at a rate greater than 6.50% per annum or in excess of the
Maximum Rate allowed by law, and (iii) the Series 2003 Bonds may not be sold for the purpose of refunding
the Refunded Bonds unless the refunding of the Refunded Bonds results in achieving the minimum net
present value debt service savings threshold described in Section 3.3 below.
The Purchase Agreement is hereby incorporated in and made a part of this Resolution and shall be
filed in the minutes of the Board as a part of this Resolution.
Section 3.3. REASONS FOR REFUNDING. That the Authority hereby finds that the issuance of
the Series 2003 Bonds for the purpose of refunding the Refunded Bonds to realize a net present value savings
is a public purpose. As a condition to the issuance of the Series 2003 Bonds, the refunding of the aggregate
principal amount of the Refunded Bonds must produce a net present value savings of at least 3%. The
Refunded Bonds shall be specifically identified in the Purchase Agreement. The Executive Director may
elect not to refund all of bonds designated in this Resolution as the Refunded Bonds, but in no event shall
the Series 2003 Bonds be issued if the refunding of the aggregate principal amount of the obligations selected
for refunding does not result in realizing the minimum savings threshold established in this Section. The
Executive Director shall execute and deliver to the Board and the City a certificate stating that the savings
threshold herein established has been satisfied. This certificate shall specifically state both the net present
value savings and the gross savings realized by the Authority as a result of refunding the Refunded Bonds.
Section 3.4. ADDITIONAL BONDS. One or more series of Bonds, on a parity with and in addition
to the Series 1979 Bonds, the Series 1994 Bonds and the Series 2003 Bonds may be issued, authenticated
and delivered under the conditions, for the purposes and pursuant to the provisions of Sections 3.4 and 3.5
of the Series 1979 Resolution.
ARTICLEFOUR
REDEMPTION OF SER1ES 2003 BONDS
Section 4.1. GENERAL. Any redemption of all or any part of the Series 2003 Bonds issued under
the provisions of this Resolution or in accordance therewith which are subject to redemption shall be made
in the manner provided in the Purchase Agreement.
Section 4.2. PARTIAL REDEMPTION. In case of the redemption of less than all the Series 2003
Bonds outstanding, except as otherwise provided herein or in the resolution or resolution authorizing such
Series 2003 Bonds, the particular Series 2003 Bonds to be redeemed shall be selected from all the
outstanding Series 2003 Bonds as provided in the FORM OF BONDS.
Section 4~3. REDEMPTION OF ADDITIONAL BONDS. Additional Bonds shall be subject to
redemption prior to their stated maturities as may be provided in the resolution or resolutions authorizing
their issuance.
ARTICLE FIVE
Draft 8/21/03 17
PLEDGE AND FUNDS
Section 5.1. PLEDGE. The principal of and interest on the Bonds shall be paid and secured by a
first lien on and pledge of the Contract Payments for Debt Service, and said lien and pledge are hereby
irrevocably confirmed, and the holders of the Bonds shall never have the right to demand payment thereof
out of any funds of the Authority.
Section 5.2. FUNDS. (a) The following special funds of the Authority created with the Trustee by
the Series 1979 Resolution are hereby confirmed, to wit:
(i)
the "Nueces River Authority Contract Payments for Debt Service Fund"
(the "Contract Payment Fund");
(ii)
the "Nueces River Authority Water Supply Revenue Bonds Interest and
Sinking Fund (the "Interest and Sinking Fund");
(iii)
the "Nueces River Authority Water Supply Revenue Bonds Reserve Fund"
(the "Reserve Fund").
(b) All moneys in said Funds are pledged to the purposes expressed herein and in the Series
1979 Resolution.
(c) Pursuant to the Series 1979 Resolution all of said Funds created by this Section shall be kept
with the Trustee.
Section 5.3. CONTRACT PAYMENT FUND. All Contract Payments for Debt Service shall be
received by the Trustee and shall be deposited by the Trustee as received into the Contract Payment Fund.
Section 5.4. FLOW OF FUNDS. Moneys on deposit in the Contract Payment Fund shall be
transferred by the Trustee in the following sequence and order of priority and on the following dates, to-wit:
(a) The Trustee shall transfer to the Interest and Sinking Fund -
(i) on or before each March 25 and September 25 such amounts as will be sufficient,
together with other funds therein, to pay the interest on the Bonds on the next succeeding interest
payment date thereof; and
(ii) on or before each March 25 and September 25 through March 25, 20__, one-half of such
amounts as will be sufficient, together with other funds, therein, to pay the principal of the Bonds
maturing on the next succeeding April 1.
(b) So long as the amount on deposit in the Reserve Fund equals or exceeds a sum equal to the
amount required to pay the interest on and principal of the Bonds outstanding during the Fiscal Year such
payments are the greatest, no transfers into the Reserve Fund shall be required under this paragraph (b).
However, should the amount on deposit in said Fund ever be less than a sum equal to the amount required
to pay the interest on and principal of the Bonds outstanding during the Fiscal Year such payments are the
greatest, the Trustee shall replace any deficiency therein in not more than ten (10) equal installments by
making transfers in the necessary amounts into said Fund from the Contract Payment Fund on or before each
March 25 and September 25 beginning with the March 25 of the Fiscal Year following the Fiscal Year in
which the deficiency occurred. The Authority shall make payments to the Trustee for the credit of the
Draft 8/21/03 1 8
Contract Payment Fund at the times and in the amounts required to permit the timely transfers required by
this Section to be made from the Contract Payment Fund to the Reserve Fund.
Section 5.5. USE OF INTEREST AND SINKING FUND. Monies on deposit in the Interest and
Sinking Fund each year shall be used solely and exclusively first for the purpose of paying the interest on
and principal of the Bonds as such interest comes due and the principal thereof matures; or for the purpose
of calling and redeeming Bonds prior to maturity at the applicable redemption price and/or for the purpose
of purchasing Bonds in the open market for retirement for prices not greater than the par value plus accrued
interest of any Bonds thus purchased or if redeemable prior to stated maturity, not greater than the
redemption price on the next succeeding redemption date. No purchases shall be made of Bonds with monies
in the Interest and Sinking Fund which would result in not having sufficient monies therein to pay Bonds at
their stated maturities. The Trustee timely shall make available the funds on deposit therein to the Paying
Agents for such purposes. At such time as the monies and investments in the Interest and Sinking Fund and
the Reserve Fund shall equal the aggregate principal amount of the Bonds outstanding and interest thereon
to stated maturity dates of such Bonds, or, if any of such Bonds shall be redeemable prior to stated maturity,
thc interest thereon to such redemption dates and any applicable premium, no further transfers shall be made
to the Interest and Sinking Fund.
Section 5.6. USE OF RESERVE FUND. For so long as any of the Bond shall be outstanding the
Reserve Fund shall be held as a reserve for the payment of principal of and interest on the Bonds when and
if monies on deposit in the Interest and Sinking Fund shall not be sufficient for such purpose. If such
deficiencies occur, the Trustee shall transfer money on deposit in the Reserve Fund to the Interest and
Sinking Fund for the uses specified for that Fund. The monies in the Reserve Fund shall be used to pay the
last of the Bonds outstanding.
Section 5.7. SECURITY AND INVESTMENT OF FUNDS. The trustee will secure and keep
secured, in the manner required by law, all cash funds on deposit with it, and will cause the Paying Agents
to secure all funds deposited with them as other trust funds are secured. The Trustee shall invest the monies
in the Interest and Sinking Fund, the Reserve Fund, and the Contract Payment Fund fully and continuously
in Investment Securities or Certificates of Deposit of State and National Banks which shall be lawfully
insured or secured by Investment Securities, all in accordance with resolutions from time to time adopted
by the Board, approved by the City and delivered to the Trustee. Such investments shall be converted to cash
only at the times monies are needed for payments required by this Resolution. All interest and income on
such investments as realized shall be deposited into the Contract Payment Fund.
Section 5.8. PERFECTION OF SECURITY INTEREST [N PLEDGE. Chapter 1208, Texas
Government Code, applies to the issuance of the Series 2003 Bonds and the pledge of the Contract Payments
for Debt Service, and such pledge is therefore valid, effective, and perfected. If State law is amended at any
time while the Series 2003 Bonds are outstanding and unpaid such that such pledge is to be subject to the
filing requirements of Chapter 9, Texas Business & Commerce Code, then in order to preserve to the
registered owners of the Series 2003 Bonds the perfection of the security interest in said pledge, the Board
agrees to take such measures as it determines are reasonable and necessary under State law to comply with
the applicable provisions of Chapter 9, Texas Business & Commerce Code and enable a filing to perfect the
security interest in said pledge to occur.
ARTICLE SIX
BOND PROCEEDS AND REDEMPTION OF THE REFUNDED BONDS
Draft 8/21/03 19
Section 6.1. BOND PROCEEDS. Promptly after the delivery of the Series 2003 Bonds, the
proceeds received from the sale thereof together with the amounts on hand on the Delivery Date in the
Interest and Sinking Fund shall be deposited and disbursed as follows:
(a) To the Interest and Sinking Fund, an amount representing the accrued interest received
from the Purchasers.
(b) To the Authority's General Fund from Bond proceeds, an amount equal to the estimated
expenses in connection with the issuance and sale of the Bonds.
(d) To the Interest and Sinking Fund, the balance of the proceeds received from the sale of
the Bonds, being an amount which will be sufficient to timely pay the principal of, interest on and
redemption premium due on the Refunded Bonds on April 1, 2003, the redemption date.
In the event that the Bond proceeds deposited in the Authority's General Fund to pay the expenses
in connection with the issuance and sale of the Bonds are in excess of the amount needed for such purpose,
such excess shall be removed from the General Fund and deposited into the Interest and Sinking Fund to be
used to pay interest on the Series 2003 Bonds.
Section 6.2. REDEMPTION OF REFUNDED BONDS. The Refunded Bonds are hereby called for
redemption prior to maturity on ,200_ at a redemption price equal to of the principal amount
of such redeemed bonds plus accrued interest to the redemption date. The form of Notice of Redemption
attached to this Resolution is hereby approved and the Executive Director is authorized and directed to take
such actions as are necessary to assure the redemption of the Refunded Bonds. The Executive Director is
further authorized and directed to take such actions and give such notices as are necessary to revoke the
redemption of the Refunded Bonds in the event the Series 2003 Bonds are not delivered by the redemption
date for the Refunded Bonds.
In addition to the notice of redemption given in accordance with the resolution authorizing the
Refunded Bonds, the notice of redemption shall also be given by United States mail, first-class, postage
prepaid to each registered securities depository and to any national information service that disseminates
redemption notices. Any notice sent to the registered securities depositories or such national information
services shall be sent as soon as possible after the sale of the Series 2003 Bonds.
ARTICLE SEVEN
GENERAL COVENANTS
Section 7.1. RECORDS. (a) The Authority will keep or cause to be kept proper books of record
and account in which full, true and correct entries will be made of all income, expenses and transactions of
and in relation to the Project and each and every part thereof in accordance with accounting practices
recommended by the National Committee on Governmental Accounting and within ninety (90) days after
the close of each Fiscal Year the Authority will furnish to the City, the Municipal Advisory Council of
Texas, the Financial Advisor, and any holder of any Bonds who may so request a signed or certified copy
ora report by a Certified Public Accountant covering the preceding Fiscal Year.
(b) The holder or holders of any Bonds or any duly authorized agent or agents of such holders,
shall have the right at all reasonable times to inspect all such records, accounts and data relating to the
Authority and the Project, and to inspect the Project and all properties comprising same.
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Section 7.2. COMPLIANCE WITH CONTRACT. To the end that the Contract Payments for Debt
Service will be made in accordance with the Contract and the same will be sufficient to pay the Bonds and
the interest thereon as they become due, the Authority will comply with the terms of the Contract and keep
the same in effect, and ~vill enforce the terms of the Contract. The Authority will not consent to any
amendment to the Contract which would extend the time of the payment of any amounts due thereunder or
which would in any manner impair or adversely affect the rights of the holders of the Bonds from time to
time.
Section 7.3. COMPLIANCE WITH FEDERAL CONTRACT. To the end that the Project will be
properly maintained and the rights of the Authority and the holders of the Bonds will he preserved and
protected, the Authority will comply with the terms of the Federal Contract and will enforce the terms of the
Federal Contract.
Section 7.4. CORPORATE EXISTENCE OF AUTHORITY. The Authority represents that it is a
conservation and reclamation district, and a governmental agency and body politic and corporate, duly
created, organized and existing under the Constitution and laws of the State of Texas and has proper
authority from all other public bodies and authorities, if any, having jurisdiction thereof to operate, maintain,
repair, renew and replace the Project or any interest therein. The Authority will at all times maintain its
corporate existence and maintain a lawful Board of Directors, and at all times function and act in the best
interest of the Project and the bondholders. The Authority hereby further covenants that it has the lawful
power to pledge the revenues supporting the Bonds; that all corporate action on its part to that end has been
duly and validly taken; and that the Bonds issued hereunder shall be ratably secured under said pledge in
such manner that one Bond shall have no preference over any other Bond of said issue.
Section 7.5. FURTHER ENCUMBRANCES. The Authority covenants that in no event while any
of the Bonds or interest thereon remains outstanding and unpaid, shall the Authority sell, mortgage, lease or
otherwise dispose of its interest in the Project, or any substantial part thereof, nor shall the Authority further
encumber the Contract Payments for Debt Service in any manner except in accordance with this Resolution,
or unless such encumbrance shall be made junior and subordinate in all respects to the lien and pledge herein
created for the benefit of the Bonds and the interest thereon.
Section 7.6. INSURANCE. (a) The Authority will, or will cause the City at all times to keep
insured with a responsible insurance company or companies, such of the plants, structures, buildings,
stations, machinery and equipment of the Project against risk of accidents or casualties against which
insurance is usually carried by similar governmental entities operating like properties, to maintain insurance
against public liability and property damage in a reasonable amount, provided such insurance can be
procured at reasonable cost, and to maintain workmen's compensation insurance with a responsible insurance
company or companies or a State-approved workmen's compensation plan or program. However, at any time
while any contractor engaged in the construction shall be fully responsible therefor, the Authority shall not
be required to carry or cause to be carried any of the foregoing insurance.
(b) In the event of any loss or damage and proceeds from such insurance policies are available
the Authority will apply or cause to be applied proceeds of insurance policies covering such loss or damage
solely for that purpose. The Authority will use its best efforts to have the work of reconstruction or repair
begun promptly after such loss or damage shall occur and have the same continued and properly completed
as expeditiously as possible. If engineering assistance is not available from the United States, the Authority
will procure or cause to be procured the advice and recommendation in writing of Consulting Engineers
concerning such reconstruction before it is undertaken.
(c) Any amounts remaining after the completion of and payment for any such reconstruction or
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2l
repair shall be deposited to the credit of the Contract Payment Fund.
Section 7.7. MAINTENANCE, REVIEW AND INSPECTION. The Authority recognizes that the
Federal Contract provides that a representative of the United States with a representative of the Authority
and the City may, from time to time, review the maintenance of the Project being operated by the Authority
and the City to determine the condition of the Project and adequacy of the maintenance program. A report
of the review including recommendations, if any, will be prepared by the United States and copies will be
furnished to the Authority and the City. If deemed necessary by the United States or the Authority and the
City, special inspections of the Project and the books and records being maintained will be made by the
United States to ascertain, in the event of any operation and maintenance deficiency remedial measures
required for correction to assist the Authority and City in solving specific problems. Any such inspection
or audit shall, except in the case of emergency, be made in written notice to the Authority and the City, and
the actual cost thereof shall be paid by the Authority and the City to the United States. Should this
arrangement for reviews and inspections be terminated for any reason, while any of the Bonds is outstanding,
the Authority will employ or cause to be employed, a Consulting Engineer to give all necessary or desirable
advice and recommendations to the end that the Project shall be operated and maintained in the most efficient
and satisfactory manner. Further, the Authority shall cause the Consulting Engineer to make in writing a
review and report on the physical condition of the Project works once every three years, including their
recommendations as to (1) the proper maintenance, repair and operation of the Project, including their
findings as to whether or not properties have been maintained in good repair and sound operating condition;
and (2) the improvements, renewals and replacements which should be made. A copy of such report and
review shall be filed with the City and the Authority.
Section 7.8. CONTINUING EFFECT OF AUTHORITY'S STATUTORY RIGHTS. No provision
contained in this Resolution shall in any way affect the statutory right of the Authority to issue bonds except
bonds on a parity with the Bonds which shall be issued in accordance with the Series 1979 Resolution and
this Resolution.
ARTICLE EIGHT
TRUSTEE
Section 8.1. TRUSTEE ACCEPTANCE. By the execution of the Acceptance Clause at the end
hereof, the Trustee does hereby affirm the acceptance of the trust imposed by the Series 1979 Resolution and
this Resolution and agrees to comply with the terms thereof.
Section 8.2. NO LIABILITY. The rfrustee shall not be liable for any act done or step taken or
omitted by it, including losses incurred in buying and selling investments, or any mistake of fact or law or
for anything which it may do or refrain from doing, except for its negligence and/or its willful misconduct
in the performance of any obligation imposed upon it hereunder. The Trustee shall not be responsible in any
manner whatsoever for the recitals or statements contained in the Bonds or any proceedings taken in
connection therewith or statements of the Authority contained in this Resolution.
Section 8.3. NO RESPONSIBILITY. The Trustee shall have no responsibility to any persons in
connection herewith except those specifically provided herein and shall not be responsible for anything done
or omitted to be done by it except for its own negligence and/or willful misconduct. The Authority covenants
that it will not commence any action against the Trustee, in equity or otherwise as a result of any action taken
or thing done by the Trustee pursuant to this Resolution or pursuant to any written demand or authorization
for which provision is herein made.
Draft 8/21/03 22
Section 8.4. TRUST AND OTHER AGREEMENTS. The Trustee, except as herein indicated and
as a Paying Agent/Registrar and a Trustee with respect to certain of the Authority's bond issues, is not a party
to any other agreement or undertaking between the Authority and the Trustee nor is it bound by nor need it
give consideration to the terms or provisions of any agreement or undertaking between the Authority and
other persons, and the Trustee assents to and is to give consideration only to the terms and provisions of this
Rcsolution. Unless it is specifically provided, the Trustee has no duty to determine or inquire into the
happening or occurrence of any event or contingency or the performance or failure of performance of the
Authority with respect to arrangements or contracts with others, the Trustee's sole duty hereunder being to
deposit monies and to dispose of and deliver the same in accordance with instructions herein.
Section 8.5. OBLIGATION TO USE REASONABLE CARE AND DILIGENCE. If, however, the
Trustee be called upon by the terms of this Resolution to determine the occurrence of any event or
contingency, Trustee shall be obligated, in making such determination, only to exercise reasonable care and
diligence, and in event of error in making such determination Trustee shall be liable only for its own willful
misconduct and/or negligence in the light of all the circumstances, taking into consideration the time and
facilities available to Trustee in the ordinary conduct of its business. In determining the occurrence of any
such event or contingency Trustee may request from the Authority or any other person such reasonable
additional evidence as Trustee in its discretion may deem necessary to determine any fact relating to the
occurrence of such event or contingency, an in this connection may inquire and consult, among others, with
the Authority at any time and Trustee shall not be liable for any damages resulting from its delay in acting
hereunder pending its examination of the additional evidence requested by it.
Section 8.6. TRUSTEE RELIANCE ON AUTHORITY. The Trustee is authorized by the Authority
to rely upon the representations, both actual and implied, of the Authority and all other persons connected
with this Resolution and the deposited property as to authority to execute this Resolution, notifications,
receipts or instructions hereunder, and relationships among persons, including persons authorized to receive
delivery hereunder, and Trustee shall not be liable to any person in any manner for such reliance.
Section 8.7. GOOD FAITH RELIANCE BY TRUSTEE. The Trustee may act upon any written
notice, request, waiver, consent, certificate, receipt, authorization, power of attorney, or other instrument or
document which Trustee in good faith believes to be genuine and to be what it purports to be.
Section 8.8. TRUSTEE RELATIONSHIP WITH AUTHORITY AND CITY. The Trustee or any
company of which it is a subsidiary or in which it may be interested, or any officer, stockholder or director
of the Trustee or of any such company, in its or his individual or fiduciary capacity, may acquire, hold or
dispose of Bonds or coupons, or may engage in or be interested in any financial or other transaction with the
City or the Authority or any corporation in which the City or the Authority may be interested, and the Trustee
may act as depository, trustee or agent for the City or the Authority or for any committee or body of holders
of Bonds, whether or not secured hereby, all with the same rights as though the Trustee were not Trustee
hereunder.
Section 8.9. USE OF TRUSTEE FUNDS. Nothing in this Resolution shall require the Trustee to
expend or risk its own funds or incur financial liability in the performance or exercise of any of its rights,
powers or duties if it does not have reasonable grounds to believe that the funds will be repaid or that it will
be adequately indemnified as to risk and liability.
Section 8.10. REMOVAL AND RESIGNATION. (a) The Trustee and any successor hereafter
appointed may at any time resign from the trust hereby created by giving 90 days' written notice to the
Authority and such resignation shall take effect upon the appointment of a successor Trustee by the
bondholders or by the Authority. Such notice may be served personally or sent by registered mail.
Draft 8/21/03 23
(b) The Trustee at any time acting hereunder may be removed at any time by an instrument or
concurrent instruments in writing delivered to the Trustee and to the Authority and the City or instruments
or concurrent instruments in writing delivered by the Authority and the City to the Trustee and signed by the
holders a majority in amount of the Bonds.
(c) In case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be in
course of dissolution or liquidation or otherwise become incapable of acting hereunder, or in case the Trustee
shall be taken under control of any public officer or officers or ora receiver appointed by a court, a successor
may be appointed by the holders of a majority in principal amount of the Bonds hereby secured and then
outstanding, by an instrument or concurrent instruments in writing signed by such holders, or by their
attorneys in fact, duly authorized; provided, nevertheless, that in case of such vacancy the Authority by an
instrument executed by resolution of the Board, and signed by its President, and attested by its Secretary
under its corporate seal, may appoint a temporary Trustee to fill such vacancy until a successor shall be
appointed by the bondholders in the manner above provided; and any such temporary Trustee so appointed
by the Authority shall immediately and without futther act be superseded by the Trustee so appointed by such
bondholders. Every such temporary Trustee so appointed by the Authority shall be a trust company or bank
or bank and trust company located in a Federal Reserve City in the State of Texas, in good standing, having
a cumulative capital, surplus and undivided profits and reserves of not less than twenty-five million dollars
($25,000,000), if there be such an institution willing, qualified and able to accept the trust upon reasonable
and customary terms.
Section 8.11. FEES. The Authority will pay or cause to be paid to the Trustee its reasonable fees
for its services as Trustee and Paying Agent/Registrar as set forth in the Paying Agent/Registrar Agreement
presented to the Board.
Section 8.12. NOTICE. Any notice, authorization, request or demand required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly given when mailed by registered
or certified mail, postage prepaid addressed as follows:
Nueces River Authority
First State Bank Building, Suite 206
200 East Nopal Street
Uvalde, Texas 78801
Attention: Executive Director
City of Corpus Christi
1201 Leopard
City Hall
Corpus Christi, Texas 78403
Attention: City Manager
JPMorgan Chase Bank
2001 Bryan Street
1 Ith Floor
Dallas, Texas 75201
The United States Post Office registered or certified mail receipt showing delivery of the aforesaid shall be
conclusive evidence of the date and fact of delivery.
Either party may change the address to which notices are to be delivered by giving to the other party
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not less than ten (10) days prior notice thereof.
Section 8.13. COMPLETION. Upon the taking of all the actions as described herein by Trustee the
Trustee shall have no further obligations or responsibilities to any of the parties hereto or to any other person
or persons in connection with this Resolution
ARTICLE NINE
DEFEASANCE
Section 9.1. DEFEASANCE. Any Bond shall be deemed to be paid and no longer outstanding when
payment of the principal of, redemption premium, if any, on such Bond, plus interest thereon to the due date
thereof(whether such due date be by reason of maturity, upon redemption, or otherwise), either (a) shall have
been made or caused to be made in accordance with the terms thereof, or (b) shall have been provided by
irrevocably depositing with a Paying Agent, in trust and irrevocably set aside exclusively for such payment
(1) money sufficient to make such payment or (2) Federal Securities, as defined hereinafter in this Article,
certified by an independent public accounting firm of national reputation to mature as to principal and
interest in such amount and at such times as will insure the availability without reinvestment, of sufficient
money to make such payment, and all necessmy and proper fees, compensation, and expenses of the Paying
Agents for the Bonds pertaining to the Bond with respect to which such deposit is made shall have been paid
or the payment thereof provided for. At such time as a Bond shall be deemed to be paid hereunder, as
aforesaid, it shall no longer be secured by or entitled to the benefits of this Resolution, except for the
purposes of any such payment from such money or Federal Securities.
Section 9.2. DEFEASANCE BY INVESTMENT 1N FEDERAL SECURITIES. The deposit under
clause (b) of Section 9.1 shall be deemed a payment ora Bond as aforesaid when proper notice of redemption
of such Bond shall have been given in accordance with this Resolution or irrevocable provisions have been
made for the giving of such notice. Any money so deposited with a Paying Agent/Registrar as provided in
this Article may at the direction of the Authority also be invested in Federal Securities, maturing in the
amounts and times as hereinbefore set forth, and all income from all Federal Securities in the hands ora
Paying Agent/Registrar pursuant to this Article which is not required for the payment of the Bond, the
redemption premium, if any, and interest thereon, with respect to which such money has been so deposited,
shall be turned over to the Authority.
Section 9.3. FEDERAL SECURITIES. For the purpose of this Article, the term "Federal Securities"
shall mean direct obligations of the United States of America, including obligations which are
unconditionally guaranteed by the United States of America, and which are noncallable and which at the time
of investment are legal investments under the laws of the State of Texas for the money proposed to be
invested therein.
Section 9.4. USE OF FEDERAL SECURiTIES. Notwithstanding any provision of any other Article
of'this Resolution which may be contrary to the provisions of this Article, all money or Federal Securities
set aside and held in trust pursuant to the provisions of this Article for the payment of Bonds, the redemption
premium, if any, and interest thereon, shall be applied to and used solely for the payment of the particular
Bonds, the redemption premium, if any, and interest thereon, with respect to which such money or Federal
Securities have been so set aside in trust.
Section 9.5. AMENDMENT AFTER PURCHASE OF FEDERAL SECURITIES. Notwithstanding
anything elsewhere in this Resolution contained, if money or Federal Securities have been deposited or set
aside with a Paying Agent/Registrar pursuant to this Article for the payment of Bonds and such Bonds shall
Draft 8/21/03 25
not have in fact been actually paid in full, no amendment to the provisions of this Article shall be made
without the consent of the owoer of each Bond affected thereby.
ARTICLE TEN
COVENANTS REGARDING TAX-EXEMPTION
Section 10.1. COVENANTS REGARDING TAX-EXEMPTION. The Authority covenants that it
shall make such use of the proceeds of the Series 2003 Bonds, regulate investments of the proceeds thereof
and take such other and further actions as may be required by sections 103 and 141 through 150, inclusive,
of the Internal Revenue Code of 1986, as amended (the "Code"), and all applicable temporary, proposed and
final regulations and procedures promulgated thereunder or promulgated under the Internal Revenue Code
of 1954, to the extent applicable to the Code (the "Regulations"), necessary to assure that interest on the
Series 2003 Bonds is excludable from gross income for federal income tax purposes. Without limiting the
generality of the foregoing covenant, the Authority hereby covenants as follows:
(a) to take any action to assure that no more than 10 percent of the proceeds of
the Bonds or the projects financed therewith (less amounts deposited to a reserve fund, if
any) are used for any "private business use", as defined in section 141(b)(6) of the Code or,
if more than 10 percent of the proceeds are so used, that amounts, whether or not received
by the Authority, with respect to such private business use, do not, under the terms of this
Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the
payment of more than 10 percent of the debt service on the Bonds, in contravention of
section 141(b)(2) of the Code;
(b) to take any action to assure that in the event that the "private business use"
described in subsection (a) hereof exceeds 5 percent of the proceeds of the Bonds or the
projects financed therewith (less amounts deposited into a reserve fund, if any) then the
amount in excess of 5 percent is used for a "private business use" which is "related" and not
"disproportionate", within the meaning of section 141(b)(3) of the Code, to the
governmental use;
(c) to take any action to assure that no amount which is greater than the lesser
of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a
reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state
or local governmental units, in contravention of section 141 (c) of the Code;
(d) to refrain from taking any action which would otherwise result in the Bonds
being treated as "specified private activity bonds" within the meaning of section 141(a) of
the Code;
(e) to refrain from taking any action that would result in the Bonds being
"federally guaranteed" within the meaning of section 149(b) of the Code;
(f) to refrain from using any portion of the proceeds of the Bonds, directly or
indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire
investment property (as defined in section 148(b)(2) of the Code) which produces a
materially higher yield over the term of the Bonds, other than investment property acquired
with --
(1) proceeds of the Bonds invested for a reasonable temporary period until such
Draft 8/21/03 26
proceeds are needed for the purpose for which the bonds are issued,
(2) amounts invested in a bona fide debt service fund, within the meaning of
section 1.148-1 (b) of the Treasury Regulations, and
(3) amounts deposited in any reasonably required reserve or replacement fund
to the extent such amounts do not exceed 10 percent of the proceeds of the Bonds;
(g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated
as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise
contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the
extent applicable, section 149(d) of the Code (relating to advance refundings); and
(h) to pay to the United States of America at least once during each five-year
period (beginning on the date of delivery of the Bonds) an amount that is at least equal to
90 percent of the "Excess Eamings", within the meaning of section 148(f) of the Code and
to pay to the United States of America, not later than 60 days after the Bonds have been paid
in full, 100 percent of the amount then required to be paid as a result of Excess Earnings
under section 148(0 of the Code.
The Authority understands that the term "proceeds" included "disposition proceeds" as defined in the
Treasury Regulations and, in the case ora refunding bond, transferred proceeds (if any) and proceeds of the
refunded bonds expended prior to the date of the issuance of the Bonds. It is the understanding of the
Authority that the covenants contained herein are intended to assure compliance with the Code and any
regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event
that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as
applicable to the Bonds, the Authority will not be required to comply with any covenant contained herein
to the extent that such failure to comply, in the opinion of nationally-recognized bond counsel, will not
adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 of
the Code. In the event that regulations or rulings are hereafter promulgated which impose additional
requirements which are applicable to the Bonds, the Authority agrees to comply with the additional
requirements to the extent necessary, in the opinion of nationally-recognized bond counsel, to preserve the
exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In
furtherance of the foregoing, the Executive Director may execute any certificates or other reports required
by the Code and to make such elections, on behalf of the Authority, which may be permitted by the Code as
are consistent with the purpose for the issuance of the Bonds. In order to facilitate compliance with the
above clause (h), a "Rebate Fund" is hereby established by the Authority for the sole benefit of the United
States of America, and such Rebate Fund shall not be subject to the claim of any other person, including
without limitation the registered owners of the Bonds. The Rebate Fund is established for the additional
purpose of compliance with section 148 of the Code.
The Authority hereby designates the Bonds as "qualified tax-exempt obligations" as defined in section
265(b)(3) of the Code. In furtherance of such designation, the Authority represents, covenants and warrants
the following: (a) that during the calendar year in which the Bonds are issued, the Authority (including any
subordinate entities) has not designated nor will designate bonds, notes or other obligations, which when
aggregated with the Bonds, will result in more than $10,000,000 of"qualified tax-exempt obligations" being
issued; (b) that the Authority reasonably anticipates that the amount of tax-exempt obligations issued, during
the calendar year in which the Bonds are issued, by the Authority (or any subordinate entities) will not
exceed $10,000,000; and, (c) that the Authority will take such action or refrain from such action as necessary,
and as more particularly set forth in Section 11, hereof, in order that the Bonds will not be considered
"private activity bonds" within the meaning of section 141 of the Code.
Draft 8/21/03 27
ARTICLE Xl
MISCELLANEOUS
Section 11.1. AMENDMENTS NOT REQUIRING NOTICE OR CONSENT. Without any prior
action by or notice to the holders of the Bonds, the Authority may, from time to time, and at any time, amend
this Resolution:
(1) to add to the covenants and undertakings of the Authority contained in this
Resolution such additional covenants and undertakings as may be authorized or permitted by laws;
or
(2) to cure any ambiguity, defective or inconsistent provisions of this Resolution and
to accomplish any other purposes not inconsistent with the provisions of this Resolution and which
shall not impair the security afforded hereby.
Section 11.2. OTHER AMENDMENT PROCEDURES. (a) The holders of Bonds aggregating in
principal amount of three-fourths of the aggregate principal amount of Bonds and Additional Bonds at the
time outstanding (not including in any case any such bonds which may then be held or owned by or for the
account of the Authority) shall have the right from time to time to approve an amendment of this Resolution
which may be deemed necessary or desirable by the Authority, provided, however, that without the consent
of the holders of all of the outstanding Bonds, nothing herein contained shall permit or be construed to permit
the amendment of the terms and conditions contained in this Resolution or in the Bonds so as to:
(1) Make any change in the maturity of the outstanding Bonds or Additional Bonds;
(2) Reduce the rate of interest borne by any of the outstanding Bonds or Additional
Bonds;
(3) Reduce the amount of the principal payable on the outstanding Bonds or Additional
Bonds;
(4) Modify the terms of payment of principal of or interest on the outstanding Bonds
or Additional Bonds or any of them, or impose any conditions with respect to such payment;
(5) Affect the rights of the holders of less than all of the Bonds or Additional Bonds
then outstanding;
(6) Change the minimum percentage of the principal amount of Bonds necessary for
consent to such amendment.
(b) If at any time the Authority shall desire to amend the Resolution under this Section, the
Authority shall cause notice of the proposed amendment to be published in a financial newspaper or journal
published in the State of Texas, once during each calendar week for at least four successive calendar weeks.
Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof
is on file at the places of payment for inspection by all holders of Bonds and Additional Bonds. Such
publication is not required, however, if notice in writing is given to each holder of Bonds and Additional
Bonds.
(c) Whenever at any time not less than thirty days and within one year from the date of the first
Draft 8/21/03 28
publication of said notice or other service of written notice the Authority shall receive an instrument or
instruments executed by the holders of at least three-fourths in aggregate principal amount of Bonds and
Additional Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment
described in said notice and which specifically consent to and approve such amendment in substantially the
form of the copy thereof on file with the places of payment, the Authority may adopt the amendatory
resolution in substantially the same form.
(d) Upon the adoption of any amendatory resolution pursuant to the provisions hereof, the
Resolution shall be deemed to be amended in accordance with such amendatory resolution, and the respective
rights, duties and obligations under the Resolution of the Authority and all the holders of outstanding Bonds
and Additional Bonds shall thereafter be determined, exercised and enforced hereunder, subject in all
respects to such amendments.
(e) Any consent given by the holder of a Bond pursuant to the provisions of this Section shall
be irrevocable for a period of six months from the date of the first publication of the notice provided for in
this Section, and shall be conclusive and binding upon all future holders of the same Bond during such
period. Such consent may be revoked at any time after six months from the date of the first publication of
such notice by the holder who gave such consent, or by a successor in title, by filing notice thereof with the
places of payment and the Authority, but such revocation shall not be effective if the holders of three-fourths
aggregate principal amount of the Bonds and Additional Bonds outstanding prior to the attempted revocation,
consented to and approved the amendment.
(f) For the purpose of this Section, the fact of the holding of Bonds by any bondholder and the
amount and numbers of such Bonds, and the date of his holding same may be provided by the affidavit of
the person claiming to be such holder, or by a certificate executed by any trust company, bank, banker, or
any other depository, wherever situated, showing that at the date therein mentioned such person had on
deposit with such trust company, bank, banker or other depository, the Bonds described in such certificate.
The Authority may conclusively assume that such ownership continues until written notice to the contrary
is served upon the Authority.
Section 11.3. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED SERIES 2003
BONDS. (a) Replacement Bonds. In the event any outstanding Series 2003 Bond is damaged, mutilated,
lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new
bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or
destroyed Series 2003 Bond, in replacement for such Series 2003 Bond in the manner hereinafter provided.
(b) Application for Replacement Bonds. Application for replacement of damaged, mutilated, lost,
stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In
every case of loss, theft, or destruction of a Series 2003 Bond, the registered owner applying for a
replacement bond shall furnish to the Authority and to the Paying Agent/Registrar such security or indemnity
as may be required by them to save each of them harmless from any loss or damage with respect thereto.
Also, in every case of loss, theft, or destruction of a Series 2003 Bond, the registered owner shall furnish to
the Authority and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction
of such Series 2003 Bond. In every case of damage or mutilation ora Series 2003 Bond, the registered owner
shall surrender to the Paying Agent/Registrar for cancellation the Series 2003 Bond so damaged or mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any
such Series 2003 Bond shall have matured, and no default has occurred which is then continuing in the
payment of the principal of, redemption premium, if any, or interest on the Series 2003 Bond, the Authority
may authorize the payment of the same (without surrender thereof except in the case of a damaged or
mutilated Series 2003 Bond) instead of issuing a replacement Series 2003 Bond, provided security or
Dral~ 8/21/03 29
indemnity is furnished as above provided in this Section.
(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement bond, the
Paying Agent/Registrar shall charge the registered owner of such Series 2003 Bond with all legal, printing,
and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of
this Section by virtue of the fact that any Series 2003 Bond is lost, stolen, or destroyed shall constitute a
contractual obligation of the Authority whether or not the lost, stolen, or destroyed Series 2003 Bond shall
be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Resolution
equally and proportionately with any and all other Series 2003 Bonds duly issued under this Resolution.
(e) Authority for Issuing Replacement Bonds. In accordance with Chapter 1206, Texas Government
Code, this Section shall constitute authority for the issuance of any such replacement bond without necessity
of further action by the governing body of the Authority or any other body or person, and the duty of the
replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the
Paying Agent/Registrar shall authenticate and deliver such Series 2003 Bonds in the form and manner and
with the effect, as provided in Section 2.3 of this Resolution for Series 2003 Bonds issued in conversion and
exchange for other Series 2003 Bonds.
Section 11.4. DIRECTOR AND OFFICER LIABILITY. No recourse under or upon any obligation,
covenant or agreement contained in this Resolution, or in any Bond hereby secured, or under any judgment
obtained against the Authority, or by the enforcement of any assessment or by any legal or equitable
proceeding by virtue of any constitution or statute or otherwise, or under any circumstances, under or
independent of this Resolution, shall be had against any director or officer, as such, past, present or future,
of the Authority, nor either directly or through the Authority, or through a receiver or trustee in bankruptcy,
or otherwise, for the payment for or to the Authority or any receiver thereof, or for or to the holder of any
Bond issued hereunder or otherwise, of any sum that may be due and unpaid by the Authority upon any such
Bond. Any and all personal liability of every nature, whether at common law or in equity, or by statute or
by constitution or otherwise, of any such director or officer, individually or in his official capacity, to
respond by reason of an act or omission on his part or otherwise, or for any sum that may remain due and
unpaid upon the Bonds hereby secured or any of them, is hereby expressly waived and released by the
purchasers and holders of the Bonds as a condition of and consideration for the issuance and sale of such
Bonds.
Section 11.5. COMPLIANCE WITH RULE 15c2-12. (a) Annual Reports. Following the issuance
of the Bonds, the offer or sale of which is not exempt from the United States Securities and Exchange
Commission Rule 15c2-12 Rule (the "Rule") as provided in subsection (d) of this Section 11.5 (the of this
"Section") below, and, until the City is no longer obligated, contingently or otherwise, to make Contract
Payments for Debt Service in respect of the Bonds, the City undertakes to and shall provide annually to each
NRMSIR and any SID, within six months after the end of each Fiscal Year, (1) financial information and
operating data of the general type included in the Sale and Offering Documents for the Bonds, as specified
in the City's approval of such Sale and Offering Documents and (2) audited general purpose financial
statements of the City, if then available. Any financial statements so to be provided shall be (1) prepared in
accordance with generally accepted accounting principles for governmental agencies or such other
accounting principles as the City may be required to employ from time to time pursuant to state law or
regulation, and (2) audited, if the City commissions an audit of such statements and the audit is completed
within the period during which it must be provided. If the audit of such financial statements is not complete
within such period, then the City shall provide unaudited financial statements within the required period, and
shall provide audited financial statements for the applicable Fiscal Year of the City to each NRMS1R and
any SID, when and if the audit report on such statements become available.
If the Fiscal Year of the City is changed, it will notify the Trustee, each NRMSIR, and any SID in
Draft 8/21/03 30
writing of the change (and of the date of the new Fiscal Year end of the City) prior to the next date by which
the City otherwise would be required to provide financial information and operating data pursuant to this
Section.
The financial information and operating data to be provided pursuant to this Section may be set forth
in full in one or more documents or may be incorporated by specific reference to any document or specific
part thereby (including an official statement or other offering document, if it is available from the MSRB)
that theretofore has been provided to each NRMSIR and any S1D or filed with the SEC. Copies of such
information and operating data shall be furnished to the Authority at the same time the information and data
are furnished to any NRMSIR or S1D.
(b) Material Event Notices. The following are the events with respect to the Bonds which the
Authority must agree to disclose in a timely manner pursuant to the Rule, if "material" under applicable
federal securities laws and regulations promulgated thereunder.
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults;
(3) Unscheduled draws on debt service reserves reflecting financial difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform;
(6) Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
(7) Modifications to rights of holders of the Bonds;
(8) Bond calls;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the Bonds; and
(11) Rating changes.
The City shall, promptly after obtaining actual knowledge of the occurrence of any of the events
enumerated above, notify the Authority of such event and provide all information in the format required to
satisfy the requirements of the Rule. Further, the City shall provide, in a timely manner, notice of any failure
by the City to provide audited financial statements, financial information, and operating data in accordance
with this Section to each NRMSIR and each SID.
(d) Limitations, Disclaimers, and Amendments. The City shall be obligated to observe and perform
the covenants specified in this Section in respect of the Bonds for so long as, but only for so long as, the City
remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the City
in any event will give notice of any deposit made in accordance with this Resolution that causes the Bonds
no longer to be outstanding.
The provisions of this Section are for the sole benefit of(and may be enforced by) the owners and
beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any
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legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only
the financial information, operating data, financial statements, and notices which it has expressly agreed to
provide pursuant to this Section and does not hereby undertake to provide any other information that may
be relevant or material to a complete presentation of the City's financial results, condition, or prospects or
hereby undertake to update any information provided in accordance with this Section or otherwise, except
as expressly provided herein. The City makes no representation or warranty concerning such information
or its usefulness to a decision to invest in or sell Bonds at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE OWNER OR
BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR
DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY WHETHER
NEGLIGENT OR W1THOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS
SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT,
FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR
MANDAMUS OR SPECIFIC PERFORMANCE.
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of
the Authority or the City under federal and state securities laws.
The provisions of this Section may be amended by the Authority and the City from time to time to
adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change
in the identity, nature, status, or type of operations of the Authority or the City, but only if (1) the provisions
of this Section, as so amended, would have permitted an underwriter to purchase or sell the Bonds in the
primary offering of the Bonds in compliance with the Rule, taking into account any amendments or
interpretations of the Rule since such offering as well as such changed circumstances, and (2) either (a) the
owners of a majority in aggregate principal amount (or any greater amount required by any other provision
of this Resolution that authorizes such an amendment) of the outstanding Bonds affected consent to such
amendment or (b) an entity that is unaffiliated with the Authority or the City (such as nationally recognized
bond counsel) determines that such amendment will not materially impair the interest of the owners and
beneficial owners of the Bonds and is permitted by the terms of this Section. lfthe Authority and the City
so amend the provisions of this Article in connection with the financial or operating data which the City is
required to disclose under this subsection (a) of this Section, the City shall provide a notice of such
amendment to be filed in accordance ~vith subsection (b) of this Section, together with an explanation, in
narrative form, of the reason for the amendment and the impact of any change in the type of financial
information or operating data to be so provided. The Authority and the City may also amend or repeal the
provisions of this Section if the SEC amends or repeals the applicable provision of the Rule or a court of final
jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the
provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in
the primary offering of the Bonds.
(e) Exemption from the Rule. Notwithstanding the foregoing provisions of this Section, if the
Purchase Agreement provides that the Bonds are to be issued in minimum authorized denominations of
$100,000 and sold to persons as set forth in Section (d)(l)(i) of the Rule, then the City will not make an
undertaking, as otherwise provided by the Rule, in reliance upon the exemption provided in Section (d)(1)(i)
of the Rule.
Section 11.6. DISPOSITION OF PROJECT. The Authority covenants that the property financed
with the proceeds of the Refunded Bonds will not be sold or otherwise disposed in a transaction resulting
in the receipt by the Authori~ of cash or other compensation, unless the Authority obtains an opinion of
nationally-recognized bond counsel substantially to the effect that such sale or other disposition will not
adversely affect the tax-exempt status of the Series 2003 Bonds or the Refunded Bonds. For purposes of this
Draft 8/21/03 32
Section, any portion of the property financed with the proceeds of the Refunded Bonds comprising personal
property and disposed of in the ordinary course of business shall not be treated as a transaction resulting in
the receipt of cash or other compensation. For purposes of this Section, the Authority shall not be obligated
to comply with this covenant if it obtains an opinion of nationally-recognized bond counsel to the effect that
such failure to comply will not adversely affect the excludability for federal income tax purposes from gross
income of the interest.
Section 11.7. CUSTODY, APPROVAL, AND REGISTRATION OF SERIES 2003 BONDS; BOND
COUNSEL'S OPINION, CUSIP NUMBERS AND CONTINGENT INSURANCE PROVISION, IF
OBTAINED. The President of the Board of Directors of the Authority is hereby authorized to have control
of the Series 2003 Bonds initially issued and delivered hereunder and all necessary records and proceedings
pertaining to the Series 2003 Bonds pending their delivery and their investigation, examination, and approval
by the Attorney General of the State of Texas, and their registration by the Comptroller of Public Accounts
of the State of Texas. Upon registration of the Series 2003 Bonds said Comptroller of Public Accounts (or
a deputy designated in writingto act for said Comptroller) shall manually sign the Comptroller's Registration
Certificate attached to such Series 2003 Bonds, and the seal of said Comptroller shall be impressed, or placed
in facsimile, on such Certificate. The approving legal opinion of the Authority's Bond Counsel and the
assigned CUSIP numbers may, at the option of the Authority, be printed on the Series 2003 Bonds issued
and delivered under this Resolution, but neither shall have any legal effect, and shall be solely for the
convenience and information of the registered owners of the Series 2003 Bonds. In addition, if bond
insurance is obtained, the Series 2003 Bonds may bear an appropriate legend as provided by the insurer.
Section 11.8. FURTHER PROCEDURES. The President or Vice President and Secretary or
Assistant Secretary of the Board of Directors and the Executive Director of the Authority, and all other
officers, employees and agents of the Authority, and each of them, shall be and they are hereby expressly
authorized, empowered and directed from time to time and at any time to do and perform all such acts and
things and to execute, acknowledge and deliver in the name and under the corporate seal and on behalf of
the Authority the Letter of Representation with DTC regarding the Book-Entry Only System, if the Bonds
are issued under the Book-Entry-Only-System, the Paying Agent/Registrar Agreement with the Paying
Agent/Registrar and all other instruments, whether or not herein mentioned, as may be necessary or desirable
in order to carry out the terms and provisions of this Resolution, the Letter of Representation, the Series 2003
Bonds, and the sale of the Series 2003 Bonds pnrsuant to the Purchase Agreement. Notwithstanding anything
to the contrary contained herein, while the Series 2003 Bonds are subject to DTC's Book-Entry Only System
and to the extent permitted by law, the Letter of Representation is hereby incorporated herein and its
provisions shall prevail over any other provisions of this Resolution in the event of conflict. In case any
officer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such
Series 2003 Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if
such officer had remained in office until such delivery.
Section 11.9. PAYING AGENT/REGISTRAR AGREEMENT. The Paying Agent/Registrar
Agreement by and between the Authority and the Paying Agent/Registrar, in substantially the form and
substance submitted to the Board at the meeting at which this Resolution is adopted is hereby approved and
the Executive Director of the Authority is hereby authorized to complete, amend, modify, and execute the
Paying Agent/Registrar Agreement.
Section l 1.10. RESCISSION OF INCONSISTENT BOARD ACTIONS. All resolutions, orders or
other actions of the Board heretofore adopted, passed or taken inconsistent with this Resolution are hereby
rescinded.
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